Report: Vodafone targets TIM Brasil acquisition to enter Brazilian mobile market

Vodafone is mulling an acquisition of TIM Brasil, Telecom Italia's Brazilian mobile phone business, as a way of entering the lucrative Latin American market.

The UK-headquartered mobile group is seeking to buy its way into the Brazilian mobile market rather than participate in a forthcoming auction of 4G (LTE) frequencies in the country, local newspaper O Estado de S. Paulo reported.

Citing a report of a meeting between Vodafone executives and Brazilian authorities in London in July, the newspaper states Vodafone would prefer to enter Brazil as a majority shareholder in one of the country's three leading mobile operators than compete in the LTE auction.

TIM Brasil is the country's second largest operator with a market share of 26.9 per cent, O Estado de S. Paulo stated citing figures from Anatel, Brazil's national telecoms agency. Telefónica's local Vivo business ranks top on a 28.7 per cent share, and Claro in third place on a 24.9 per cent share.

Vodafone entered the Brazilian market in November 2013 as a provider of machine-to-machine services, O Estado de S. Paulo added.

While the benefits to Vodafone of acquiring a controlling stake in TIM Brasil appear clear--the company would immediately become a top three player in the country's mobile market-- recent moves by Telecom Italia suggest it is not interested in selling its Brazilian operation.

Instead, the Italian incumbent is reportedly preparing to bid up to €7 billion ($9.2 billion) to acquire Vivendi's Brazilian broadband operator Global Village Telecom (GVT), which it would then merge with TIM Brasil to shore up its position as a provider of converged fixed and mobile services.

Telefónica sparked the interest in GVT after revealing it offered Vivendi €6.7 billion for the business on Aug. 5. The offer included an 8.3 per cent stake in Telecom Italia, which would enable Telefónica to meet conditions set by Brazilian regulator Cade to either cut its holding in the Italian operator or dispose of Vivo.

Cade set the conditions in 2013, after Telefónica raised its holding in Telecom Italia shareholder vehicle Telco.

For more:
- read the O Estado de S. Paulo report [in Portuguese]

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